A number of lenders have already reacted to the decision by the Bank of England Monetary Policy Committee (MPC) to cut the Bank Rate to 0.25%.
Three minutes after the cut was made public, Coventry for intermediaries said it would be passing on the rate cut in full to all its variable rate mortgage borrowers.
Mark Parsons, the Coventry’s chief executive, said: “As a member-focussed organisation we are pleased to be in the position to pass on the full benefit of today’s 0.25% rate cut to mortgage borrowers. It is testament to the strength of the Society, as demonstrated by our half year results, that we are able to announce this today, with the reduction being applied from 1 September.”
Similarly, Santander confirmed it would pass on the reduction to its SVR on mortgages in full. From the beginning of September 2016, Santander’s Standard Variable Rate will be 4.49%. The Alliance & Leicester Standard Variable Rate on mortgages will also be reduced by 0.25% to 4.74%.
All mortgage products linked to base rate will move in line with the reduction. These new rates will be used to calculate mortgage repayments with effect from the beginning of September. All Santander loans to UK businesses linked to the base rate will move in line with the reduction and in accordance with the terms of the deal.
Reza Attar-Zadeh, head of retail products, said: “When we review rates, following a change in Bank of England base rate, we consider both the interest we charge for borrowing money, and the rate of interest we can offer on deposits. Santander is passing on the rate reduction in full to its mortgage customers and for our existing savings accounts, we’ll be reducing rates by no more than 0.25% [sic].
“Given changing market conditions, including the market expectation that interest rates will be lower for longer, we are also reviewing our current account interest rates.”
A Barclays spokesperson said: “Customers with Barclays Bank base rate tracker mortgages and customers on the Barclays standard variable rate will see their rates reduce by 0.25% [sic].
“We will provide advance notification to those customers whose mortgage payments will change.”
Others are mulling over the decision. In a statement, the Nationwide Building Society said it “…is working through what this may mean for its savings, variable rate mortgage and current account customers. We will be communicating any changes in due course.”